Fitch Ratings was not asked to rate the deal, only to provide its opinion, and added that credit risk on the RMBS is too great for its highest structured finance rating. However, competing ratings agencies Standard & Poor's and DBRS assigned AAA to several tranches of the deal.

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Eighty-two percent of the loans are originated by MetLife Home Loans in the deal. The remainder is sourced by Quicken Loans (11%) and PHH Mortgage (7%). Redwood Trust(RWT) also successfully brings private-label RMBS to market. Wells Fargo Bank will serve as master servicer, and U.S. Bank National Association will serve as trustee.

Credit Suisse titled the deal CSFB Mortgage Securities Corp. 2012-CIM1, and successfully priced Friday. For its part, Fitch sees too much risk in the underlying collateral and not enough support in case performance wanes. Typically, two ratings agencies are needed to successfully market a RMBS as AAA.

"In the geographic areas where the mortgage loans are located, Fitch currently assumes home prices will decline a further 11.5% on average before reaching a sustainable level," Fitch said in a statement.

Credit enhancement, such as overcollateralization, would be necessary to mitigate the risk of house prices falling in the RMBS pool.

Fitch also cast doubt on the deal's representation and warranty enforcement mechanisms.

"This transaction does not provide for binding arbitration to resolve breaches on the MetLife-originated loans. Fitch acknowledges the financial strength of the provider’s parent (stable)," Fitch said. "However, Fitch also believes that the lack of this provision, or an alternative, could result in extended resolution timelines and higher costs should MetLife decide to contest repurchase requests."

Other concerns such as MetLife’s limited operating history, Mortgage Electronic Registration Systems recording and the transfer of servicing for the deal’s first distribution date also factored into Fitch’s analysis," the rating agency said.

According to DBRS, the loans are mainly seasoned first-lien, fixed rate mortgages secured by one- to four-family residential properties. As of the cut-off date on March 1, 2012, the loans had an aggregate principal balance of approximately $741,939,430, a weighted-average mortgage rate of 4.94%, an updated FICO score of 760 and a original combined loan-to-value ratio of 70.6%.

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Jacob Gaffney is the Editor-in-Chief of HousingWire and HousingWire.com. He previously covered securitization for Reuters and Source Media in London before returning to the United States in 2009. While in Europe for nearly a decade, he covered bank loans and the high yield market, in addition to commercial paper, student loan, auto and credit card space(s). At HousingWire, he began focusing his journalism on all aspects of the housing and mortgage markets.

This month inHousingWire magazine

Eight years after we began recognizing women for their influential work in the expanding housing and mortgage finance ecosystem, a traditionally male-dominated field, our Women of Influence list is bigger and better than ever! This year, we honor 85 women who are making lasting achievements in each sector of the housing economy. Read on to learn more about these accomplished women and the strides they are making in their industry segments.

Feature

The financial world at large is experimenting with changing its workforce culture in ways not fathomable 10 years ago. For example, in 2011, the dress code for female workers at UBS came to light with unflattering results. In it, the Swiss bank instructed female employees on not just how to dress and how to smell, but also preached the importance for ladies to apply lotion after taking showers. Fast forward to today and fellow Swiss bank, Credit Suisse has now created an official role to boost equal opportunities and create a fair treatment environment. Has the American mortgage industry made similar progress?

Commentary

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